I have a lengthy history of modifying 26 inch Schwinn Varsitys. These American made bicycles are virtually bulletproof and make great donor frames and forks for various projects. I modified my first 26 inch Varsity frame in the early 1980's to fit 26in x 1.75in mountain bike tires and rims. These wheels lowered the bottom bracket with its hollow aftermaket chrome moly 180 mm crank. I bashed a number of objects with the cranks over the years and never bent anything. I mounted cantilever studs on the front fork with Mafac cantilevers and never bent the fork. I got rid of all the Schwinn steel components and ran aluminum everywhere, seatpost, seatpost clamp, and handlebars. I ran a one speed coaster brake hub from Czechoslavakia that was absulutly bulletproof. These coaster brake hubs are still available and I highly recommend them. I never burned out the coaster no matter how long and steep the downhills in off road racing. The 26 inch Varsity frame with all these changes weighed in at 31 lbs. In those days this was a very competitive weight. I also built another Varsity bicycle the same way but with a triple up front using the hollow one piece crank and an adaptor plate that let me bolt all the chainrings for a triple onto it. I used a Huret DuoPar rear derailleur but this bicycle did not do well in off road competition because of chain bounce and skipping. I went back to the one speed because of its reliable off road racing ability. I had a special chrome moly frame built that was lighter that my Varsity's by 2-3 lbs. but my overall standings in the NORBA off road races did not show improvement since this amount of weight reduction is minimal. I believe you can find aluminum 27x1 1/4inch wheelsets fairly cheaply on the Internet that will work on your Varsity and these would be a big improvement. You can spread the rear fork on the bicycle to accept cassette hubs and this would take care of your rear bent axles. See Sheldon Brown's website for a better description of the practice of bending steel frames. I am a fan of drum brakes but don't have a lot of coming down big mountain experience with them I have used Shimano Nexus roller hub brakes for several years and the front roller brake is weak at best. The roller brake itself needs maintenance greasing on a regular basis. I use a Worksman front drum brake on an LGB model bicycle and it works wonderfully with no maintenance. Even though the Varsity frame and fork weigh more than equivelent chrome molly frames, they can be lightened with proper choice of components down to near where a lot of more expensive bikes are at in terms of overall weight. The Varsity framsets make very comfortable riding bicycles that are very durable. Finally as I age I have come to appreciate a good and proper bicycle side stand and the old Chicago Schwinns have one of the very best. Good luck whichever way you go on this project.